First budget surplus recorded since 2007

First budget surplus recorded since 2007

THE State eked out a budget surplus of €50mn last year, its first since 2007, according to final data that showed a 7pc rise in revenues, much of it from company taxes, offset a 6pc hike in spending.

Spending heads showed that pay and other benefits for government workers rose to €22.2bn in the year, up from €20.7bn, a rise of 7.5pc from the 2017 total.

Total government spending was equivalent to 25.6pc of gross domestic product, a dramatic fall from the more than 40pc of GDP figure it hit in 2013 which was the post crisis peak.

Despite the decline in the deficit from post-crisis highs, the government has been warned by the Irish Fiscal Advisory Council that repeated overspending versus targets combined with an over-reliance on corporate tax receipts makes the country vulnerable in any future financial crisis.

Although gross government debt levels rose in euro terms, to €206.2bn at the end of 2018 from of €201.4bn in 2017, it fell as a proportion of gross domestic product thanks to the 6.8pc economic growth recorded last year.

As a result the debt to GDP ratio came in at 64.8pc, down from 68.5pc the previous year, and although that still places Ireland above the 60pc level stipulated by the Stability and Growth Pact, it is at least moving in the right direction.

It is the ratio of debt to the size of the economy that is important rather than the outright level and high levels of economic growth are the only realistic means of cutting the debt burden.

Economic growth this year is expected to slow to around 4pc, although that depends on the terms under which Britain manages to leave the European Union.

The Central Bank of Ireland had estimated that growth could drop to as low as 1pc this year, but an extension of the Brexit negotiations until the end of October now means that worst case scenario will not emerge.